Parcelforce acts to staunch cash drain

Parcelforce aims to be a smaller but smarter carrier under restructuring plans announced last week by parent group Consignia.
The company, which has not been in the black since its formation in the 1980s and is now losing £180m a year, is shelving 6,700 out of 11,700 jobs. It will close five parcel sorting centres by the end of June, together with 51 of its 101 depots in a bid to save £460m (€736m).

MD Vanessa Leeson said Parcelforce would withdraw from the three-day and longer sector, which is shrinking by 12% a year. Mail order returns and the “granny parcel” business would be handled by Royal Mail, leaving Parcelforce to focus on international traffic and overnight and 48-hour domestic business.

The company will maintain its up-to-9pm Select service, described by Leeson as the “precision, premium” end of home delivery, which was introduced last year.

Leeson declined to state how much of Parcelforce’s existing business was in the one to two-day sector, but said this was increasing at 5% a year. “Our objective is not necessarily to grow the revenues, but to keep volumes and get the right revenue per parcel. With the reduction in costs, we can run a profitable business.” Paul Jackson, CEO of parcels and express consultancy Triangle, said: “The moves to close depots and come out of the three-day market are logical – and five to 10 years too late.

“Parcelforce will now move into a highly competitive market based as much on customer service as price.

“There will need to be massive cultural changes and much improved customer focus.” Leeson responded: “To be a credible express carrier, you have to have a good network and the ability to track and trace.

The necessary investment was not put in in the 1990s and then our new hubs went through planning delays. It’s only for the last year that we have had the ability to be a credible express player.

“We have won important express business during the last year, but the three to five-day business drags down the perception of the brand.” Refuting suggestions from logistics analyst Datamonitor that Consignia “may be preparing Parcelforce for eventual sale, ” Leeson told IFW: “At the moment, the Consignia board has no freedom to sell our business and would have no will to do so.

They are absolutely behind our strategy.”